In a new analysis, the Office of the Superintendent of Financial Institutions predicted that reverse mortgages will continue to enjoy popularity and growth over the next few years if current senior borrowing trends keep up.
The statement came in the wake of a recent TransUnion study, which found that the number of mortgages issued to Canadians aged 73-93 increased by 63% year-over-year during Q1 2018.
In comparison, baby boomer (54-72 years old) originations increased by just 18%. Meanwhile, borrowing activity shrank by 19% among those aged 24-38, and 22% in the 18-23 demographic.
The OSFI reported that Canada’s total reverse mortgage debt load went up by 43.98% on a year-over-year basis in September, reaching approximately $3.07 billion.
This also represented a healthy gain over the $3.035 billion in August.
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Baby boomers, who are predicted to step up as a large contingent of the equity-using segment within a few years, will especially benefit.
“They’re cashing out of homes that, over the years, built tremendous equity for them,” CENTURY 21 Canada executive vice-president Brian Rushton said.
“[Boomers] in their mid- to late-60s are living longer and may want to enjoy some sun in Florida during the winter, so how do they accommodate that with their home? Neighbourhoods also change and might no longer be the places they raised their kids in, so they may want to move.”